Scope and the June 2026 second edition
Module Seven’s forty-six slides cover group revenue tests after mergers/demergers, joining/leaving CEs, asset/liability transfers, JVs and multi-parent structures. The ordinary MMT threshold is UPE consolidated revenue at least EUR 750 million in at least two of the four preceding financial years. It is not individual-entity revenue or revenue of only Singapore entities.
Regulation 4A merger of groups
All or substantially all entities of at least two constituent groups must become entities of one MNE group. Acquiring a standalone entity alone is not this group-merger category. For each premerger year aggregate constituent groups’ consolidated revenues; in the merger year aggregate relevant constituent periods plus the merged group’s first financial year. Its first year is the one containing the effective merger date.
Merger example: EUR 755 million in 2024
A/B/C merge on 1 July 2024, all using calendar years. Their combined 2021/2022/2023 revenue is 300/550/770 million. First-half 2024 constituent revenue 355 million plus merged second-half 400 million= 755 million. Two threshold years 2023 and 2024 put M in scope for 2025. This demonstrates period aggregation rather than counting only the new group’s 400 million.
Regulation 4B standalone-entity mergers and different year ends
Scenario A combines two or more nongroup entities; scenario B combines nongroup entities with one or more groups. Aggregate standalone revenue and relevant constituent consolidated revenue for each prior year, and include merged-group revenue for the merger year. If year ends differ, use each entity/group’s financial year ending within the merged group’s relevant prior year. The same different-year-end rule applies to Regulation 4A group mergers.
Different-year-end example: September versus December
M’s year ends 31 December; standalone A acquired 1 January 2025 has 30 September year end. A’s years ending September 2021–2024 are added respectively to M’s December 2021–2024 years. A’s 1 October–31 December 2024 revenue is not separately added to M’s 2024 test. Do not replace the prescribed financial-year pairing with arbitrary calendar prorating.
Demerger definition and years 1–4
Relevant in-scope groups, including specified groups under qualified IIR before 2025, separate into at least two groups no longer consolidated by one UPE. Disposal leaving a single standalone CE is not this demerger. Year 1 after demerger requires that year’s revenue≥750 million; Year 2 requires both Years 1/2; Year 3 requires at least two of Years 1–3; Year 4 at least two of Years 1–4. These transitional tests include the tested year, unlike the ordinary two-of-four-prior-years test.
Joining/leaving: membership and period amounts
If any part of an entity’s assets, liabilities, income, expenses or cash flows is consolidated line by line in the UPE accounts, it is treated as a CE for that whole financial year. Only FANIL, adjusted covered taxes and eligible payroll amounts included in those consolidated statements enter the group’s calculation. Tangible-asset carveout is prorated for its membership portion of the year. Whole-year CE status does not mean adding its entire standalone-year profit.
Purchase accounting and transferred deferred attributes
Ignore acquisition purchase-accounting consolidation adjustments for the acquired CE’s FANIL, qualifying current tax and deferred tax in acquisition and later years. On transfer from Group B to A, existing deferred assets/liabilities excluding special-loss assets are valued as if A had controlled the entity when those attributes arose. This avoids an acquisition resetting attributes solely to a purchase-accounting step-up.
Transferred liabilities: reversal, fresh arising and later recapture
A liability previously included in B’s qualifying deferred-tax expense is treated as reversed for B and arising in the transfer year for A. If later recaptured, its reduction in A’s qualifying current tax takes effect only in that later recapture year. The slides retain this special timing rather than reopening A’s acquisition year whenever recapture happens.
When equity acquisition is deemed an asset transfer
A controlling-interest acquisition/disposal is treated as acquisition/disposal of CE assets/liabilities, instead of Regulation 59, if local law treats it similarly to an asset transfer and covered tax is imposed on the seller’s gain/deemed gain. For a flow-through CE look to the assets’ jurisdiction; otherwise the CE’s jurisdiction. Both conditions matter.
Ordinary transfer basis and arm’s-length adjustment
The disposing CE includes transfer gain/loss in its Glo BE income/loss. For a Regulation 60 deemed transfer, the acquiring CE uses fair value if it underlies the seller’s gain/loss; otherwise use carrying value under the accounting standard of its UPE consolidated statements. Intragroup non-arm’s-length transfer gains/losses must be adjusted to independent comparable conditions.
Glo BE reorganisation: all three conditions
A merger, demerger, liquidation, entity-form change or similar event must satisfy A: consideration wholly/significantly consists of cancellation of liquidating equity or transferee/connected-person equity, or absent consideration equity issuance would lack economic significance because beneficial ownership is unchanged; B: transfer gain/loss is wholly or partly untaxed; C: transferee local tax basis carries over the transferor’s tax basis adjusted for nonqualifying gain/loss. Calling a transaction a restructuring alone does not meet all three.
Reorganisation gains and carried-over basis
Exclude transfer gain/loss from transferor FANIL except nonqualifying gain/loss. Subsequent transferee disposals use immediately prior transferor carrying value adjusted for that nonqualifying amount. The source defines nonqualifying gain/loss by limits based on the amount locally taxed/deducted and the amount reflected in FANIL; it is not a blanket exemption for every accounting gain on reorganisation.
JV, standalone JV, group and connected status
A JV is equity-accounted in UPE consolidated statements with at least 50% direct or indirect UPE ownership. A standalone JV has no subsidiary; a JV group consists of the JV and its subsidiaries. It is connected to an MNE group when that group and the equity-accounting report share the UPE. Not every colloquial joint venture meets this definition.
All excluded JV categories and the special excluded-entity caveat
Exclude an MNE UPE, an excluded entity, a JV subsidiary and an entity held by a group composed solely of excluded entities. Also exclude holdings through excluded entities where the investee exclusively/almost exclusively holds assets/invests for investors, performs ancillary activities for its excluded owner, combines those activities, or derives almost all income from excluded dividends/equity gain/loss. The stated excluded-entity references carve out the specified pension-fund, qualifying nonprofit-subsidiary, service-entity and exempt-income-entity categories; preserve that qualification when evaluating the chain.
JV top-up calculation is separate
Connected standalone JVs/JV-group members with a top-up amount are relevant entities. Calculate as if the JV population were a separate MNE group and the standalone JV or JV-group head were its UPE. Module Four contains detailed ETR/top-up calculations; this module does not authorise blending ordinary-group and JV results merely because the entities share a jurisdiction.
Multi-parent first arrangement: five requirements
At least two groups with cross-jurisdiction entities/PEs have UPEs entering the prescribed arrangements. First arrangement requires contractual combination rather than cross-shareholdings, fixed-ratio distributions to owners, single economic management retaining separate UPE legal personality, UPE equity trading independently on different markets, and externally audited combined consolidated statements presenting all groups as one unit.
Multi-parent second arrangement: three requirements
At least fifty percent of each UPE’s ownership interests are combined so they cannot trade/transfer independently; listed combined interests have a single quoted price; and one UPE prepares externally audited combined statements as a single unit. Stapling fewer than the required ownership interests does not satisfy this definition by itself.
Multi-parent treatment: all groups, parents and responsibility
Treat all constituent groups as one MNE and each entity as its member. Each UPE is generally a UPE of the combined group. Specific rules refer to any UPE, for example illegal payments offending any UPE-jurisdiction law; tax-consolidation accounting refers to the UPE preparing combined statements. If any UPE owning an IPE is not a responsible member, that IPE may be responsible.
Multi-parent treatment: control, combined accounts and standards
The prescribed combined statements are the single group’s CFS. A nonexcluded investee with ownership interests held by group entities is a CE where it is consolidated line by line, or would be but for size/materiality or held-for-sale treatment. The combined-statement accounting standard is treated as acceptable. Keep these control and excluded-entity tests separate from merely having a contractual commercial alliance.
Official source
This article independently explains the substantive contents of the official PDF, including the relevant conditions, procedures and annexes. The linked document remains the authoritative source for its original wording, and later changes should be checked separately.
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